Real estate assets have some properties that lend themselves nicely to STOs – such as being relatively secure investments, requiring significant investment sums, being relatively easily comparable and quantifiable, as well as being notoriously illiquid investments.
For some years now crowd-funding platforms have offered access to invest and trade “digitized” real estate assets. Why is tokenization better? For two main reasons. The “old” crowd-funding platforms are siloed and not interoperable globally.
The real estate market will as such benefit from the “standard” blockchain value properties such as:
The global tokenization industry will use the same standards such that tokenization platforms on different continents will be interoperable. This means that real estate tokens issued by DigiShares will be tradeable on exchanges in the US, Europe and Asia. It also means that tokens issued by DigiShares can be kept in safe custody by most security token custodians globally. Finally, it means that no investors or issuers will be locked into a single vendor’s ecosystem but will be able to transfer their tokens for trading or custody to any other vendor globally (only limited by regulatory restrictions). The other reason is that blockchain technology is a much more modern, secure and efficient method for implementing securities transfer, settlement and trading compared to proprietary digitization of securities.
1. the ability to automate and reduce the cost
of issuance, transfer, settlement and trading processes, 2. the ability to automate and reduce the cost of governance processes such as crossborder transfers, cross-investor-type trading, lock-up periods, caps on investor counts, etc., 3. the subsequent increased ability to engage foreign investors and larger numbers of (smaller) investors thereby increasing the pool of investors for any given project, 4. the ability to reduce or remove different types of intermediaries such as CSDs, transfer agencies, broker-dealers, etc. due to the blockchain trust layer thereby increasing efficiency and reducing cost further, 5. the increased ability to attract investors due to the previously mentioned benefits (additional liquidity), and 6. the ability to significantly reduce ticket size of investors by an order of magnitude to cater for retail investors due to the automation of processes
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We will therefore see that good projects can raise capital easier, faster and at a reduced cost, investors will enjoy increased liquidity on their investments, good projects will get a liquidity premium, and investors will globally get access to previously inaccessible types of investments.. Further reading: DigiShares real estate blog articles:https://digishares.io/contact-real-estate DigiShares CEO presentation on real estate tokenization: https://www.youtube.com/watch?v=7nx9Xzernrc Tokenized Securities & Commercial Real Estate: https://mitcre.mit.edu/wp-content/uploads/2019/11/Tokenized-SecurityCommercial-Real-Estate2.pdf
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